Toshiba cuts NAND production by 30%

SAN FRANCISCO—Japan's Toshiba Corp. said Tuesday (July 24) it would cut its production of flash memory chips by about 30 percent, effective immediately, due to market oversupply and price declines.

Oversupply of NAND flash has resulted in continual price declines since the beginning of 2012. Toshiba (Tokyo) said it responded by adjusting shipments to the retail market since the end of June. Beginning Tuesday, it will reduce the production rate at its Yokkaichi fab in Mie prefecture, Toshiba said.

"This move will help reduce inventory in the market and improve the overall balance between supply and demand," Toshiba said in a statement.

Toshiba said it excepts the flash memory supply and demand balance to improve in the calendar third quarter, thanks to growth rates forecast for PCs and smartphones. The company said it would continue to monitor the situation and resume full production of NAND ahead of the anticipated rise in demand.

Toshiba says demand is projected to increase and that they will increase production before that happens so they can be ready for it. I think the demand has been strong, but there are just too many parts being produced. It's typical of cyclicality in memory chips--when demand is there they scramble to build more capacity, only to pay the price when supply ends up exceeding demand. Not a business for the weak of heart.

So does it signify any point regarding the reduction in demand for the NAND memory. I believe with the growing sales of tablets and smart phones there shouldn't be any inventory build at the manufacturers.

I understand the pricing pressure on NAND flash now. But aint making such press statements considered market signaling to the competition to reduce production and charge consumer more OR a price fixing tactic?